Our signals are designed for uncovered options trading. When we issue a signal we assume that options are sold short to open a trade and options are bought to close a trade. When we issue a signal to sell short puts we expect the market to move up and when we issue a signal to sell short calls we expect the market to move down.
Of course this information could be used differently from our explicit signal, however, a trader who wishes to use our signal has to realize that this might involve additional risk, and the trader's return will differ from the return generated by our system, plus a trader would not be able to autotrade our signals. In addition, since our signals are issued in real-time this may require a trader to monitor our service within the trading hours.
For instance if a trader decided to use our uncovered options signals to buy options it is recommended that the trader develop a trading strategy of following our signals. The following rules might be an example of such strategy:
Of course this is only an example of rules which could be modified in accordance to personal trading style and risk tolerance. A trader who prefers to enter a limit order may modify these rules by assuming an approximate suggested entry price and expected profit based on our signal. For instance if our system issued a signal:
If a hypothetical trader who wishes to buy options based on this signal finds 3-month expiration nearest "in the money" puts that are traded at the current at $1.20 - he may decide
Important: A trader has to understand that uncovered options trading is very risky and not suitable to every investor. A trader who wishes to use the uncovered options signals (generated by a system in the way that differs from the way that it is recommended by the system) involves additional risk. An options buyer who decided to use uncovered options signal has to understand that time is options sellers ally and time works against the options buyer.
Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.